Janesville, once a symbol of the Great Recession, becomes AI data center battleground

Amna Nawaz:

A.I. is fueling stock market highs, economic growth, and a construction boom across the country. But it's also igniting fierce local debates about the benefits, the costs, and in many cases whether the data centers that power A.I. should be built at all.

Economics correspondent Paul Solman looks at how one of those battles is playing out in the Midwest right now.

George Cullen, Co-President, JP Cullen:

Just right there is the Cozy Inn.

Paul Solman:

George Cullen has been in Janesville, Wisconsin, for quite a while.

George Cullen:

Which is the oldest continuously owned Chinese restaurant in America.

Paul Solman:

In all of America?

George Cullen:

In all of America.

Paul Solman:

The family construction business JP Cullen has worked on some of Wisconsin's most famous structures.

George Cullen:

We have been here for six generations and have been proudly building here all that time. In fact, we built the original tractor factory that was then turned into being the GM site.

Paul Solman:

Once the economic cornerstone of Janesville, the giant GM plant, in its heyday employing 7,000 people. But when the plant idled in 2008, unemployment soared to 13 percent, and the town became a nonpartisan symbol of the Great Recession.

Barack Obama, Former President of the United States: The promise of Janesville has been the promise of America.

President Donald Trump:

Hello, Janesville, and hello, Wisconsin. We love Wisconsin.

(Cheering)

Paul Solman:

Even I was dispatched to the plant to cover the economic catastrophe. But almost a decade later, says Cullen who also heads Janesville's Chamber of Commerce:

George Cullen:

Amazingly, we have replaced the number of jobs since that GM plant closed. It was hard and it took a lot of time, but we do have positive momentum here.

Paul Solman:

Positive momentum that could finally revive 250 acres of empty lot, where GM's plant used to sit, and possibly revive the city's budget with a data center.

George Cullen:

There's nothing there. Our taxes are not being offset by a large user providing their property taxes. Those property taxes will help our schools, help our technical college, and help our city.

Paul Solman:

What was your initial reaction when you heard a data center might go there?

George Cullen:

With that site having sat empty as long as it has, the positive nature that somebody was interested to put a new building on that site.

Paul Solman:

That's good?

George Cullen:

That's a positive.

Paul Solman:

Especially since no one would fork out some $30 million to clean up the contaminated site once GM's plant was demolished eight years ago. Then, last year, a Colorado-based developer offered to buy the lot, remediate, and build an $8 billion data center campus.

Garrik Harwick, IBEW Local 890: I think if there's an opportunity to bring some industry back that could really add to the tax base and employ a bunch of people, I'd love to see that being used.

Paul Solman:

Electrician Garrik Harwick IS a business manager for IBEW Local 890. With data centers blooming nationwide, unions are reporting new significant demand for their members.

Janesville's data center proposal came with the promise of hundreds of permanent jobs and at least 13,000 during construction, a major plus.

Garrik Harwick:

It could be Joe the plumber up the street that gets a job because this comes here. And that kid goes to school with your kid, and it just affects the whole community.

Paul Solman:

And then, of course, there's the case for data centers in general.

Donald Trump:

My administration will use every tool at our disposal to ensure that the United States can build and maintain the largest, most powerful, and most advanced A.I. infrastructure anywhere on the planet.

Paul Solman:

So last year, an executive order to fast-track environmental reviews and return sites like GM Janesville to -- quote -- "productive use as expeditiously as possible" -- unquote.

But now, given the nationwide groundswell against data centers, you're not going to be surprised to hear that some in Janesville aren't sold.

Ray Jewell, Pastor, Afton Community Church:

I'm not against economic development. I just want it to be reasonable, thought out, done in a way that is not going to put people in danger and harm the environment.

You see the power plant there.

Paul Solman:

Pastor Ray Jewell lives less than a mile from the site, where his dad worked for 30 years. Among his concerns, excessive water use, noise, and light pollution.

Ray Jewell:

This is right in the middle of a residential area.

Paul Solman:

And, of course, he's worried about energy prices. The nation's largest electrical grid operator recently announced it will add more than $6 billion in costs to consumers over the next three years because of power demand from data centers.

While the developer in Janesville declined an on-camera interview, it vowed the data center would minimize its impact on residents and the environment.

Jewell is, well, skeptical.

Ray Jewell:

What's existing now across the country, they can't prove it.

Paul Solman:

So he's part of what's become a wave of data center opposition. According to a recent Gallup poll, 70 percent of Americans oppose the construction of an A.I. data center in their community.

Jael Holzman, Heatmap News:

There's something about A.I. and its involvement, its impacts on people's employment prospects in the future, as well as the way they see the world in general, that has people especially riled up about these projects.

Paul Solman:

Jael Holzman reports on the A.I. data center backlash for climate Web site Heatmap. It's a uniquely unifying topic, she says, bringing together both those on the left...

Rep. Alexandria Ocasio-Cortez (D-NY):

While the American people are suffering, big tech continues to demand more, more data centers, more energy, more data collection, more American jobs replaced by A.I., all on the feet of the American people.

Paul Solman:

... and on the right, Tucker Carlson, for example.

Tucker Carlson, Conservative Commentator:

The future that A.I. promises is worse for the overwhelming majority of the people, but it empowers and enriches a tiny percentage of the population. Like, that's so crazy.

Jael Holzman:

There are so many political constituencies, movements that have found common cause here, as well as the climate movement. And so, altogether, you have honestly a pretty cosmic gumbo of politics.

Paul Solman:

According to a recent report by Data Center Watch, opponents delayed or blocked at least 75 projects worth $130 billion across the country in the first three months of this year alone.

Prescott Balch, Caledonia, Wisconsin, Resident:

We organized around a set of arguments that ultimately convinced Microsoft, in this case, and our village board to say, no thanks.

Paul Solman:

Former bank executive Prescott Balch came out of retirement when Microsoft offered to build a data center in his small Wisconsin town, Caledonia.

Were you leery of data center development at first?

Prescott Balch:

I was not. In fact, if anything, I'm on the opposite side. I made a healthy living using them. I would be hypocritical to say that we should stop building them now that I'm retired.

Paul Solman:

The state of Wisconsin passed a sales tax break in 2023 to lure data centers and enhance economic development. But having now crunched the numbers for many projects, Balch says the promised windfall isn't nearly what it seems. Moreover, small communities might be betting on a bubble.

Prescott Balch:

The volatility of the industry, the fact that it likes to disrupt itself all the time, that it's constantly changing, the risk is, if something happens with that revenue stream, it's the current residents that end up having to pick up the tab on short notice.

Paul Solman:

Balch's skepticism has resonated in Janesville. This spring, two opponents of the data center were elected to its City Council, which promptly ended the agreement with a developer. Even the Chamber of Commerce withdrew its support.

Prescott Balch:

I think the mere scale of them, particularly in smaller communities, has woken people up. If it's something that big and that grand and that impactful, you have an obligation as civic leaders to step back and say, we are going to bring the community along to get them to agree that this is the right idea, or we're not going to do it.

Paul Solman:

The developer, however, says it's hoping to revive the project. But Janesville has stalled the deal for now, still looking for an economic engine to drive its future and clean up those 250 acres.

Data center cash seemed an offer a city just can't refuse. Turns out some can.

For the "PBS News Hour," Paul Solman in Janesville, Wisconsin.